[OPE-L:4753] Re: the determination of real wages---- and a puzzle

Ajit Sinh (ecas@cc.newcastle.edu.au)
Mon, 14 Apr 1997 01:58:39 -0700 (PDT)

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At 07:39 AM 4/11/97 -0700, Paul Zarembka wrote:

>You forget the accumulation of capital. Accumulation of capital draws in
>workers expelled from results of technological change. Under your
>approach, produced VALUE is diminishing as unemployment rises. Yet,
>capitalists in fact have a drive for VALUE and SURPLUS VALUE.
___________________

Not really! You are forgetting population growth. Marx assumed a positive
population growth. The trends I'm talking about are all in terms of rate of
growth. The total value in production would be rising as long as total
*number* of workers employed is rising with given length of the working day.
However, the rate of unemployment could be rising along with it, as long as
the increase in the demand for labor is not rising as fast as the rate of
growth of population.
________
>
>On the "falling rate of profit", you collapse Marx into a simplistic point
>of view. First, he wrote concerning a falling TENDENCY of the rate of
>profit. Second, you ignore all discussion of COUNTER-TENDENCIES Marx
>wrote about.
________________

This is the whole point. His arguments on countervailing forces does not
leave us in a situation to unambiguously conclude that the tendency would
nevertheless prevail. Marx though was inclined to maintain that the tendency
would prevail even though his logic did not dictate it. Again, the reason
for it could be surmised in the empirical evidence for this tendency
generally accepted by his predecessors.
________
>
>> Given that the rate of unemployment would be rising, the
>> trade unions would not be able to turn the tide around, and could only
>> resist but not succeed in stoping the downward trend in real wages. Now,
>> Marx's theory of technical change and falling rate of profit are not
>> logically water tight. So his general prediction about rising rate of
>> unemployment is not a logical necessity either. I argue that classical
>> economists as well as Marx believed that the empirical secular trend of both
>> the rate of profit and the real wages were downward-- one towards zero, and
>> the other towards subsistence.
>
>Keynes thought the direction of the rate of profit is to zero. For
>Marx it would take surplus value falling to zero or the composition of
>capital rising to infinity. The first possibility is not worth
>discussing. The second forgets that constant capital is defined on labor
>time and there are major technological improvements in the production of
>constant capital.
_______________

The first one was what Ricardo was talking about. The second one is what
Marx is talking about. You don't have to actually get to zero, approaching
to zero assemtotically is all that is needed. Who said Marx did not make
mistakes?
_________
>
>On wages, yes, there is a struggle by capital to reduce variable capital.
>But capital is only one of two major social classes and the other is not
>simply a set of mules.
___________________

People who argue that labor-power *is* a commodity are the people who reduce
workers to mules, I don't. My position is that the result of Marx's theory
is that labor-power is not a commodity (for general public: see my paper in
RIPE vol. 15). But we should not mix up too many things in one debate. In
any case, Marx's position was that the stregth of the working class vis a
vis the capitalist class depended crucially on the rate of unemployment, and
if the rate of unemployment is rising over time then workers 'bargaining'
strength vis a vis the capitalists would be declining too.
__________
>
>> All these theorists were coming up with their
>> theories that would account for these trends. And so did Marx. He simply
>> tried to place his theoretical variables in such order that the two trends
>> would come out as a result. The arbitraryness of this is quite clear in his
>> discussion on the falling rate of profit. On the real wages there is no
>> doubt that Marx expected a downward trend in the real wages as an empirical
>> fact. He devotes 68 pages in total (in Capital I, the whole of section 5 of
>> chapter 25) to documenting a falling trend of wages in England for the
>> period 1846-66 as well as for Ireland. The thing here to look out for, which
>> I think Allin Cottrell and others missed, is the quality of housing for all
>> sections of workers. Money spent for housing constitutes a good chunck of
>> real wages for workers. If its quality is deteriorating, then it means
>> workers are losing out big! Cheers, ajit sinha
>
>Finally, I do not read Chapter 25 as you do. You read it very linearly.
>I read it as analyzing the contradictory nature of the capitalist mode of
>production.
________________

Chapter 25, section 5 is devoted to empirical tendency of wages. It's just a
statement of empirical facts collected from various sources. So there is no
question of linear or non-linear reading of it. Cheers, ajit sinha
>
>Paul Z.
>
>